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Classification of Trade-offs Encountered in the Practice of Corporate Sustainability

Abstract

Trade-offs between the conflicting aspects of corporate sustainability (CS) have hindered the realization of win–win opportunities that advance both sustainable development and the bottom line. The question today is no longer whether these trade-offs are encountered in the pursuit of CS, but under which circumstances they occur, with which responses, and how best to navigate them. This study conducted a systematic review and content analysis of the trade-off literature published to-date at both conceptual and applied levels. Through this process, a hierarchical framework is proposed for the analysis of trade-offs based on their different categories, their root tensions, their interconnections, and where they are encountered in the practice of CS, from policy to implementation. Based on this, a number of recommendations are provided on how managers may better navigate the hierarchy of trade-off decision-making, to ultimately transform trade-offs into synergies. Several suggestions for future trade-off research are also provided.

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Notes

  1. 1.

    A note on definitions: the term corporate sustainability (CS) has been used here interchangeably with corporate social responsibility (CSR), responsibility, and sustainability. It is important to note however that some studies (e.g., Bansal and DesJardine 2014) have made subtle distinctions between these terms. Similarly, the terms firm and company have been used interchangeably as well.

  2. 2.

    As an example of the former: several articles (such as McWilliams and Siegel 1997; Xepapadeas and De Zeeuw 1999; Vilanova et al. 2009; Cainelli et al. 2013) examined the effect of improved responsibility against various dimensions of profitability or the manifest trade-off between financial and non-financial performance areas. Alternatively, for latent content: Minoja (2012) discussed the practical application of stakeholder theory to effectively manage multiple company stakeholders with competing objectives. This discussion features two underlying latent trade-off categories: which stakeholders to prioritize, and of these which stakeholder demands to respond to.

  3. 3.

    Thank you to an anonymous reviewer for this source suggestion.

  4. 4.

    Some references define it as being the trade-off between all three dimensions, while others consider it only from a binary perspective, either as environmental/social performance (E/SP) vs financial performance (FP) or to a lesser extent, environmental performance (EP) vs social performance(SP) (see: Angus-Leppan et al. 2010).

  5. 5.

    As the firm moves further along the implementation process, the trade-off between groups of salient stakeholders translates into a trade-off between which performance areas to target. The framework presented here groups these two types of trade-offs under the same ‘stakeholder’ trade-off category, given that conflicting stakeholder groups or conflicting stakeholder issues are inter-related and both assessed from a cost-benefit perspective (as described in Driessen and Hillebrand 2013).

Abbreviations

CS:

Corporate sustainability

CSR:

Corporate social responsibility

EP:

Environmental performance

SP:

Social performance

FP:

Financial performance

E/S/FP:

Environmental/social/financial performance

PD:

Product development

GRI:

Global reporting initiative

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Correspondence to Merriam Haffar.

Appendix

Appendix

See Tables 2 and 3.

Table 2 A summary of the references reviewed based on their contribution to trade-off research and to the proposed framework (in terms of the emergent tension and/or trade-off categories they included)
Table 3 A summary of the references reviewed based on their contribution to trade-off research and to the proposed framework (in terms of the emergent tension and/or trade-off categories they included)

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Haffar, M., Searcy, C. Classification of Trade-offs Encountered in the Practice of Corporate Sustainability. J Bus Ethics 140, 495–522 (2017). https://doi.org/10.1007/s10551-015-2678-1

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Keywords

  • Corporate sustainability
  • Resource-based view
  • Synergy
  • Tension
  • Trade-off
  • Triple-bottom-line
  • Win–win